Digitising the experience to deliver on demand

The number of miles driven continues to rise, even while the number of vehicles sold declines. Although individuals and organisations still need to keep on the move, the appeal of owning a depreciating asset is waning, particularly to a generation which is also struggling to get on the housing ladder. However, shifting trends do not spell the end of the automotive sector as we know it, perhaps just a rebalancing of priorities. 

Whereas manufacturers used to speak of being car companies, now the word of choice is mobility. Albeit the concept of Mobility as a Service (MaaS) or Car as a Service (CaaS) is not a new one, its importance has risen sharply in recent years. The desire to access vehicles and wider mobility services at the touch of a button, or app, without the hassle of having to insure, store or maintain the asset provides comfort to those whose work and personal lives are complex.

Throw COVID-19 into the mix, as we have seen in 2020, and the waters are further muddied. After the initial 2020 global lockdown, Google Trends data showed people worldwide had been looking for affordable private transport options to avoid having to catch a bus or train; ride sharing services were hit by social distancing measures; and dealer data suggested there is a ripe market for good quality used vehicles to meet that consumer demand.   

There has also been a sharp increase in the number of manufacturers offering subscription services, allowing consumers to pay a monthly fee to access one or more vehicles on quick change cycles and with all add-ons such as insurance, breakdown cover, fuel, and so on included. Indeed, the subscription model is arguably ideal for those reeling from the pandemic and looking for flexibility and minimal commitment.     

According to a report from enterprise software company Zuora, subscription-based businesses continue to outperform traditional business models even throughout the pandemic. Four in five subscription companies were still growing, when the report was compiled in May, with half of companies growing just as fast as before the pandemic. One in five (18%) were seeing subscriber rates accelerate. However, revenue per subscription was not accelerating so quickly.  
In the automotive sector, several OEMs have launched subscription-based models to market, while the various ride-hailing apps also offer access via subscription. Increasingly, subscription is the model of choice in the micro and e-mobility space. Electric bikes and scooters can be unlocked via an app using both one-off and subscription payment plans.